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A practical guide to impact tolerances

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The regulatory narrative on operational resilience is taking shape around the world, driven in large part by the UK regulatory discussion paper in 2018.

Since then we have seen many firms start to shift their thinking in line with the core principles, partly in reaction to supervisory pressure but increasingly because firms recognise the commercial imperative for action.

In December 2019 the UK supervisory authorities published a suite of consultation papers setting out draft policy measures aligned to their respective objectives. The fundamentals of the supervisory approach in the consultation papers remains largely unchanged from the ideas put forward previously.

An operationally resilient firm is considered one which:

  • prioritises the things that matter;
  • sets clear standards for operational resilience (impact tolerances); and
  • invests to build resilience.

Impact tolerances therefore form a key piece of the supervisory authorities’ framework on operational resilience in that they represent the maximum tolerable level of disruption to a firm’s important business services.

In this webinar, we will explore the key developments from the consultation papers and consider the practical steps firms can take to define their tolerance for disruption and to test the effectiveness of their resilience measures. We will draw on our recent white paper and bring insights from our work with firms who are already putting these steps into practice.

If the final policy is published by the end of 2020 with a 12-month implementation period, as expected, the authorities suggest that firms will have up to the end of 2024 to demonstrate that their important business services can remain within defined impact tolerances during severe but plausible scenarios. The clock is ticking… The time to act is now.

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